Crypto Art’s Grand Entrance

Music long ago moved into the digital landscape, but artists have been thinking of creative ways to monetize their work online as the COVID-19 pandemic has prevented them from touring city to city.

Alternative rock band Kings of Leon last week announced they would be releasing its latest album, “When You See Yourself,” as a non-fungible token (NFT). And today, the New York Times reported that a JPG file by artist Mike Winkelmann, who is also known as Beeple, sold at a Christie’s auction for $69.3 million—a record for digital-only art.

In terms of cryptocurrency, this means fans can purchase the album as a digital collector’s item, because unlike bitcoins, NFTs can’t be exchanged for one another. The album will be offered as an NFT for a short amount of time and then no more will be made. While NFTs are typically used in fine art as a way to make digital art certifiably one-of-a-kind, Kings of Leon are the first band to release a full album in this way.

“This is yet another example of blockchain technology moving more into the mainstream,” said Christopher Wilmer, associate professor of chemical and petroleum engineering at the University of Pittsburgh Swanson School of Engineering.

Wilmer is also co-managing editor for Ledger, the first peer-reviewed journal for research on cryptocurrency and blockchain tech. He also co-authored a book, “Bitcoin for the Befuddled,” and has held numerous workshops on cryptocurrency since his interest in the field began in 2010. He says NFT art may democratize, to some extent, the access of young and unknown artists to art collectors.

“When fine art is sold for millions, there is a lot that goes on behind the scenes to make the transaction work. Experts certify that the fine art is not counterfeit, a long registry of prior owners is carefully maintained to establish provenance and a large number of people witness the transactions at auctions, which helps to solidify the 'value' of the art among a large group of people,” he said. “Blockchain technology, in the context of NFT art, is enabling many of these same functions to occur without the need for human experts to certify originality and provenance and with digital marketplaces serving as witnesses to the price and value of the artwork.”

While NFTs are typically associated with art, such as musician Grimes selling around $6 million worth of digital art in February, large companies are also using NFT platforms. NBA TopShot, a collectable and tradable NFT-based app sells tokens in packs that contain multimedia. Athletic wear company Nike holds a patent for its blockchain-based NFT-sneakers called CryptoKicks.

However, some experts have called into question whether this is the future of currency or just marketing hype.

“The buy-in price is $50, and for your money you get a nice collection of digital media, a chance at lifetime front-row seats and other physical perks. The fact that it's on the blockchain and tradeable is more like a novelty to me than anything,” said Michael Hamilton, assistant professor of business administration. “To be proper currency and market-disrupting tech, people would have to actually trade these coins and I find that extremely hard to imagine.”

Others have questioned sustainability practices when it comes to value created from cryptocurrencies such as bitcoin. Aurora Sharrard, Pitt’s director of sustainability, says Kings of Leon’s most recent gambit is an example of “fast fashion."

“Fast fashion is the antithesis of sustainability: items are not produced responsibly; they’re not quality, durable products; and are thus both cheap and end up as waste,” Sharrard said. “While NFTs and cryptocurrencies are means for various industries and artists to work around economic market hurdles, environmentally speaking they are the digital fast fashion of the day, requiring extreme amounts of electricity to produce non-tangible items that have little positive social benefit.”

Sharrard cited a 2019 study in the journal Energy Research & Social Science, which estimated that in 2018, every one dollar of Bitcoin value created was responsible for 49 cents in health and climate damages in the United States.

“The past year has very clearly shown that we need to focus more efforts on the wellbeing of individuals, our communities and our planet,” she said. “The distraction of crypto methods that cause huge environmental and social damage isn’t good, fun entertainment—it’s wasteful fast fashion.”